Min Saving Needed Amount according to age( 48) = $78,000.
3. Also, if one has already over 70k in EPF account and it is earning more
than 5% in dividends already and every year you still have a positive.Return, why WOULD ONE want take it out to do self investment in stocks or invest in UNIT trusts that may or may not even have a
positive return to try to beat the market?
Even
with Unit trusts = after you pay them their mgmt fees, unless the
returns are great, etc.. you're probably left with LESS than what the
yearly EPF dividends are paying out. Even in the worst of the
global financial crisis in 2008, EPF managed to pay out 4.5% interest
and that's higher than the FD banks. During this time, a lot of
investment funds have negative returns. Those who started to invest in
2008 still trying to break even today.
Better leave the money in
the account accumulating dividends while you're still working and let
the
EPF fund managers handle it for you (free of charge).
High Management and Annual Fee By Fund Manager
4. With the charge of 1.5% which means 3% when buy and sell, you need to
get 8 percent per annum just to be on par with EPF. Although 8 percent
seems low, especially in the current rally, but, the key is consistently
8 percent, which is harder than most people think.
As a
comparison, most value based hedge fund have a compounded 6% hurdle rate
( I believe Tan Teng Boo have similar hurdle rate or higher). Which
means, hedge fund manager also find that performing above 6%
consistently is a tough job. So, I guess this is a bad deal, especially
when we are paying the company a unit trust kind of fee for doing
nothing.
The only time I see this thing a good investment is
during the time when there is a massive sell off in a market, then, you
can buy big on selected blue chips. When it rebounds, you can gain back
the money. But, the timing of the entry is important too. The rest, I
think is too risky to even try using EPF money to buy stock on such a
high management fee.
All About Investing Into Unit Trust via EPF Withdrawal
This is another touchy subject to write about especially when the topic involves Employees Provident Fund (EPF).
To start off, allow me to highlight figures from EPF Year 2012 withdrawals. In a news released by EPF dated 10th of July 2013, the total amount withdrawn from EPF by Malaysians in 2012 was RM32.98 billion, an increase of 10.3% as compared to RM29.90 billion in 2011. And according to an article from
MySinChew, out of the RM32.98 billion withdrawn, RM6.64 billion were withdrawn under the category of "Investment Withdrawal".
This proves that the introduction of Investment Withdrawal Schemes by EPF have been well received by Malaysian as proven by the year to year increase in withdrawals. But what exactly is an Investment Withdrawal from EPF?
Eligibility
(i) A Malaysian Citizen; OR
(ii) A Malaysian Citizen who has made Leaving The Country Withdrawal before 1 August 1995 and has opted to re-contribute to the EPF; OR
(iii) A Non-Malaysian Citizen who:
- Has become an EPF member before 1 August 1998; OR
- Has obtained a Permanent Resident status (PR).
You have not reached 55 years of age at the time the EPF receives your application; AND
You have Account 1 savings of at least RM5,000.00 more than the required basic savings amount
Frequency of Withdrawal
Investment can be made at the intervals of three months from the date of the last transfer, subject to the availability of the required balance in Account 1
Subsequent investments may be made with the same Fund Management Institutes or other approved Fund Management Institutes. However investment is only allowed with one Fund Management Institutes at any one time.
Investment Top-Up Using Own Funds
You are not allowed to top-up your investment using your own funds.
Investment Risk Liability
You are fully responsible for this investment. EPF will not be responsible for any loss incurred.
Annual EPF Dividend on the Amount Invested
You will not be paid dividend declared by EPF on any amount you have invested as this amount has not been invested by EPF
If An Approved Fund Management Institute Has Been Delisted
Your investment with the Fund Management Institute must be sold and the funds returned to EPF by that Fund Management Institute
Release of Controls on Investments
EPF will release its controls on your investment at the Fund Management Institutes when you reach the age of 55 years old or have withdrawn all of your EPF savings under the Leaving the Country, Incapacitation, Pensionable Employees and Death Withdrawals.
Claims or selling of the invested units will be handled by you/next-of-kin with the Fund Management Institutes.
Withdrawal Amount Eligibility
You can withdraw your savings as follows:
- 20% from your savings in excess of the Basic Savings amount in your Account 1
- The minimum amount for investment withdrawal is RM1,000.00
- The maximum amount cannot exceed 20% of the savings amount in excess of your Basic Savings
- Formula: (Account 1 – Basic Savings) x 20%
Tips on Investing into Unit Trust Via Your EPF
1. Considering that this is a long term investment between 10-30 years, it is highly advisable to invest into funds with proven track record in terms of total returns.
2. The amount for every EPF withdrawal is considerably large in comparison with regular cash investment. Therefore, finding a top performing fund is vital to ensure that the money you are investing in is working doubly hard for you.
3. Ensure that you continue to invest regularly (intervals of three months) to utilize the benefits of Dollar Cost Averaging.
4. If you are unsure/unclear/uncertain about how to start an investment Unit Trust via EPF withdrawal, please seek a professional and experienced consultant to assist you in terms of
- recommending a fund that suits your risk nature
- explaining the risk that comes with unit trust investing
- explaining the entire process of EPF withdrawal for investing
Summary
As our society become aware of the importance of long term financial planning, passive investment vehicle such as unit trust is being utilized to ensure that the potential annual returns (taking into account the risk involved) are able to beat the inflation rate. I believe most of us would like our retirement savings to passivelywork hard for us while we commit ourselves to important things in our life such as our family and career. Agreed?
Despite the allowance given by EPF for Malaysians to withdraw their retirement fund for investment, we as investors should play a role by putting additional effort especially during the initial stages before investing. Find out what is unit trust investing all about. Understand the risk. Seek answers from your consultant if you find that you're unsure of certain things. Grill them if you must. Search for the top performing funds that have proven track records. Ultimately take that leap of faith by investing long term and let the fund manager prove his or her credibility.
Last but not least, always remember that every effort that you've placed in investing would go a long way towards ensuring your retirement savings work the hardest for you!
Cheers and Happy Investing!
1216 Trade ETF?: by En Mahdzir Othman
www.digital.wms2u.com
